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Mastering Personal Finances: Essential Budgeting Tips

Spending & Budgeting tips

If you want my opinion on why people have no idea why they’re struggling month to month on standard income, it’s because they don’t monitor their spending. There are plenty of ways to do this, but they all require some form of financial planning or budgeting. Only 32% of U.S. households prepare a budget, and barely half of that population even use their budget. To me, it’s not surprising people are struggling; no one knows where their money is actually going.


With all that in mind… let’s talk about managing your money.


The Process

Step 1: Create a budget. 

If you don’t know how, check out my budget blog. A budget is going to be key because you categorize your expenses and pinpoint any areas of overspend. There are a ton of budgeting tools out there, free or otherwise, that you can use to start budgeting tomorrow. Really cool ones will pull in your old transaction history and help you start out with oodles and boodles of information!


Step 2 - Review your statements. 

Depending on how you’ve decided to build your budget, this process will vary. For someone like me, who uses a simple excel sheet, I had to review my monthly spend on my bank statement to my budget allotment. I review all purchases made, categorize them, and then calculate how much I’ve spent to how much I’ve budgeted for. Some quick “To Dos” while performing this review to keep you on track:

  • Review your necessities to your budgeted amounts. The price of common necessities like insurance, gas, and utilities are always fluctuating. You may need to update your budget with price unexpected fluctuations.

  • Review and update your income. It’s important to keep your income updated through life events like getting a raise, taking on a second job, or getting married.

  • Review your savings. Life can throw unexpected expenses and events at us. Sometimes we have to stop saving. Checking in with your budget can help you determine when you can continue saving, or where you’re at toward your original goal!


I recommend doing this once a month. Building the habit of reviewing your spending can help you analyze patterns and make adjustments going into the next month. The good news is some budgeting apps track your budget for you, so you could simply log in and check out your budget summary. Some tools I’ve used point out where I’m over spending for me!


You can do this when you receive your monthly statement. Or, you can wait until the end of the month when you know all your bills are paid.


Step 3: Review your wants/flexible cash.

The first major question you need to ask yourself: are you over budget in your wants/flexible cash? I set a standard breakdown of my income, but some budgets get detailed in their categories. If you’re using categories to determine your flexible cash, check in and see how your spending aligns to your budget.


The next question: do you need to check in with yourself on your spending habits? It’s so easy to just swipe out cards to make purchases, especially credit cards. The swipe now, pay later mentality can create bad habits. We want to make sure we’re not blind to our behaviors. I have a story about a shopaholic below for more insight to this specific topic, have a read if you’re curious.


Finally, do you want to update your budget to accommodate a new goal or event? Let’s say you have a big concert you want to go to? Or a friend’s wedding? You want to save up, or shuffle around how you’re going to spend your money in the next month or two to prepare for that. This is the time to identify those upcoming events and plan for them.


Step 4: Take action. 

Using the information you gained from your review, update your budget as needed. Make sure your budget aligns with your goals and needs, then most importantly follow through. Having a budget is one thing, disciplining yourself to follow it is another.


My Opinion

The biggest mistake you can make is not reviewing your budget month to month. Most people who create budgets make it and then never go back to it. Everyone just assumes they are in line with what they set because the month they set their budget matched with their targets. 


You can’t take control of your money, or improve your financial situation, if you have no idea where it’s going and how much you’re spending. If you often ask yourself “Where is all my money going?!” you probably need a budget and some one-on-one time with your statements.


(Below here is the life story part you can skip. I included it to be more relatable and put it at the end if you haven’t bought into my bologna yet. You can thank me in the comments if you appreciate this format!)


My Experience

A family member asked me to help them review their statements and figure out how to make their budget. They had made budgets in the past but it never stuck. I had recommended budget apps and programs but they felt at a loss.


So, I asked them to send me two statements and I would review them. I put all their transactions into an excel spreadsheet, one for each month, and started categorizing their transactions. I use the simple Want/Need/Save breakdown in most cases because regardless of what we want, we should have a set max budget for flexible spending.


Her goal was to figure out why she, a recent empty nester, was still struggling to save money and make ends meet at times. One of the big wins I found for her was an opportunity to do a debt consolidation that would allow her to combine all her debts into one loan, have a smaller monthly payment amount, and cut her interest by at least 20% which was awesome!


However, what shocked both of us, was how much money she was spending in her flexible cash bucket. One month she had almost $2,000 in “flexible” spending. Her goals for the year were to pay down her debts and build up her savings, but nearly half of her income was going to non-necessities!


That was a huge eye opener for her. I drafted a recommended budget, discussed a few debt tackling plans, and told her to find and stick to a budget system that works for her so she can do it on her own. I followed up a few months later and she did follow through with the debt recommendations, saving just over $400 a month on payments for the same amount of debt! But when I asked about a proper budget or her savings goals we discussed, she hadn’t worked on either of those.


I’m telling this story because I think it proves a very important point. You can spend $15 a month on a cool budgeting app. You can hire a financial advisor and help you assess your spending. Shoot, you can set all these plans and review your statements every month. But the important part is taking action on your plans. 


Had she done what we discussed she’d have over $6,000 saved up in her first year, paid down all her debts substantially, thrown out credit cards that were enabling her bad spending habits, and shrunk her wants down by at least $500 to $1,000 on average. Thankfully I could help her for free, so she didn’t lose any money in the process, but there was so much more to be gained if she just took action.


My hope for you is that you take action, take control, and see your financial situation turn around.


Author’s note: I hope my posts are helpful. I try to break these things down in a way that is easy to read and understand. I appreciate any feedback on how to improve, so feel free to leave a comment below. If you are simply enjoying the content, I’d love to hear about that as well!


Disclosure: I am not a licensed financial advisor. I have an accounting degree and a business major with a certification in finance but I am not a legal expert. These posts come from my personal experience, learning through trial and error, working in the banking industry for nearly a decade, and seeing the fruitfulness of this advice in my own life.


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